Employment and Investment Incentive Scheme - options

[investluke]

Hi,

First time poster.

I've come into a bit of money recently ~30k and looking at a few investment options.

I'm looking to reduce my income tax liability through investment in a EIIS, but not overly sure where to start, through the power of google I see that there are various EIIS "funds" set up by the likes of Goodbody's and others but also see that they are going to take a decent fee for managing charges.

Any recommendations or good resources on where to start with this would be much appreciated.

I'm 30, earning €75k per year, homeowner with and a very manageable mortgage (less than 50% of current house value). I have yet to start a pension as all funds had been going into the house and paying for a wedding.

Much appreciated,

 

[Boyd]

Hey, welcome to AAM. Well done on being down to 50% outstanding mortgage at 30 years old. Fair play.

Post tax investment in Ireland it not great so IMO your right to consider pre-tax options. I would immediately start a pension, if I were you. Does your employer provide an occupational scheme and (possibly) offer an employer percentage match? If they don't then by law must they provide access to a PRSA. This would reduce your tax liability. This allows you to access some sort of pension via your job (I'm assuming PAYE here).

Also, before pumping in your 30K into an investment, consider what your mortgage situation is (is it SVR, if so what rate) etc. It may make more sense to hammer the mortgage down another 30K if you are getting guaranteed 3.5% return from overpaying mortgage.

Furthermore, ensure you have a buffer of 6 months of expenses aka rainy day fund, before investing money.

There is search function on the site here as well where you can search for threads specific for EIIS schemes e.g. https://www.askaboutmoney.com/threads/eiis-scheme-for-investment.201539/#post-1495820

 

[investluke]

Thanks for the advice, after I posted the above I did do a lot of reading of the keyposts on the forum.

Is the rainy day fund usually just held on deposit or in low risk/low return liquid assets? My employer is in the process of setting up a pension fund which will match contributions up to 5%, so once set up I was planning on maxing out my tax beneficial contributions.

In terms of a rainy day fund, I have recently paid for a rather large wedding so my "rainy day fund" currently sits at 0 (this 30k would be the "proceeds" of the wedding.)

My mortgage is 3.75% SVR currently with KBC - 28 years remaining on it.


One thing that muddy's the waters slightly is that I likely wont be in my current employment in twelve months time (dislike the job & industry i'm working in), but likely will have to take a healthy pay cut when moving out of my current roll (I'm thinking moving down to 40k per annum to start with wouldn't be out of the picture.) Even writing that makes me feel like i'm crazy for wanting to move, but there is zero advancement opportunity doing what i'm doing, in the company i'm working in or a competitor.

 

[investluke]

I've put together a spreadsheet that shows the different repayment dates depending on the different options I take.

As it stands, continuing along my current path, Mortgage will be paid off in February 2045 (I'll be 58)

The options I see for myself are as follows:

A) Increase my repayments by €125 per month (which currently would not be a stretch at all) - mortgage free by May 41 + significant amount of liquid assets.
- This would still allow me to build up liquid assets through savings as well as add to a currently non existent pension.

B) Increase repayments to €125 per month + 10k capital payoff, this would have mortgage repaid by Jan 40 (save 22500 in mortgage repayments by my calculations)

C) Increase repayments to €125 per month & 15k capital payoff = mortgage paid off by May 39 + full rainy day fund of 6+ months expenses.


D) Increase mortgage repayment by €625 per month = mortgage paid of by May 33, but no savings to be had in short term, would have no savings but be able to match employer contribution for pension.


I'm kind of blabbing on here so I guess question is as follows - given that I reckon i'll probably be earning a significantly lower wage in 12 months time then I am now, should I try and plow as much money into the mortgage now, knowing that I can just reduce repayments when the time comes. Should I keep a higher than usually advised "rainy day fund" due to this.

It seems to me that would be the sensible thing to do, but I'm new to this so any advice would be much appreciated.